Challenger Technologies

(27-12-2010, 09:43 PM)vader1671 Wrote: I find it difficult to think of a competitor to Challenger. Some may say that Challenger competes against the Sim Lim Square (SLS) as a one stop destination for IT goods.

I wouldn't view those individual sim lim square stores as a true compeitiors of Challenger. Those stores are just too small. Challenger's threat would more likely come from other chain electronic stores like Harvey Norman (as you mentioned) and Epicenter (which other people also mentioned).

But I do agree with you that Singapore will be saturated in the next 5 years. If they can successfully expand into Malaysia, Challenger will remain as a growth stock. If not, it can always stay as a cash cow.

Currently, I'm just worried about their new online store. If it doesn't work out, I hope that it won't consume too much resources.

Vested at 0.30

My concerns would be:

1. My estimates of IT product and services revenue per retail space (square feet) fell in 2008 and 2009. Although 1H2010 figures seem to indicate a bounce back, it is still short of 2005 levels. The opening of the megastore in Mines, KL, which I understand is not in the central part of KL city, might be a factor, and cannibalization among its Singaporean stores might be another.

2. Net margins in 2009 and 2010 are among the highest in the company's history - 5.8% and 5.6% compared to historical average of 4.7%. I believe margins tend to mean revert. But what the mean is in the IT retail sector is, I don't know. If Challenger's historical mean is a gauge then surely margins will retreat going forward.

The share price has since gone on to $0.44 per share, which indicate a P/E ratio of about 9 to 10, depending on your estimate of 2010 earnings. Perhaps not as safe anymore.

Just like in most other developed economies/markets, there is a role/space for 1 or 2 well-managed, large chain-store(s) for IT products, offering a wide, up-to-date range of merchandise at competitive prices backed by consistent, professional customer services. If properly positioned, these players will tend to enjoy steady growth and increasing profits for quite a long period of time, thereby also offering themselves as good and profitable long-term investment opportunities for their shareholders and would-be investors.

I believe Challenger has so far met this test - admirably!

Quote:My estimates of IT product and services revenue per retail space (square feet) fell in 2008 and 2009. Although 1H2010 figures seem to indicate a bounce back, it is still short of 2005 levels. The opening of the megastore in Mines, KL, which I understand is not in the central part of KL city, might be a factor, and cannibalization among its Singaporean stores might be another.

Same store sales (SSS) has been positive for the last 2 FY, according to CFO Tan. This measures sales growth for shops that have been in existence for at least a year.

As such, assuming there's indeed a decline in rev/psf, it's likely due to the setting up of new shops. These will take some months to ramp up. Unless SSS is negative, I don't see any evidence of cannibalization.

Malaysian op was running at a loss in 2009, IIRC. We'll have to wait for the AR's segmental results to see the perf for FY10.

CHALLENGER TECHNOLOGIES LIMITED
(Incorporated in the Republic of Singapore)
Company Registration No.: 198400182K
NEW LEASES LOCATED IN ANG MO KIO & JURONG EAST
The Board of Directors of Challenger Technologies Limited (“the Company”) wishes to announce that it has secured the following new lease:
Name of Shopping mall at which lease is located
Date of Commencement
Lease Area at Commencement
1.
AMK Hub in Ang Mo Kio
Around April/May 2011
About 3400 sq ft
2.
JCube in Jurong East
Around Q1 2012
About 4700 sq ft
The securing of above leases is in line with the Company’s plans to focus on their retail operations by expanding to suitable locations in Singapore.
None of the directors or substantial shareholders of the Company has any interest, direct or indirect, in the above transactions.
By Order of the Board
Loo Leong Thye
Chief Executive Officer
20 January 2011

---

CHALLENGER TECHNOLOGIES LIMITED
(Incorporated in the Republic of Singapore)
Company Registration No.: 198400182K
CANCELLATION OF NEW LEASES LOCATED IN SENGKANG
Further to the announcement on 12th November 2010 regarding the securing of leases at Rivervale Mall (“the Mall”), the Board of Directors of Challenger Technologies Limited (“the Company”) wishes to announce that despite the Company having accepted the offer, the deal has to be cancelled as the existing tenant had decided to continue their operations.
The landlord will work with the Company to source for alternative location within the Mall in the future.
None of the directors or substantial shareholders of the Company has any interest, direct or indirect, in the above transactions.
By Order of the Board
Loo Leong Thye
Chief Executive Officer
20 January 2011

---

CHALLENGER TECHNOLOGIES LIMITED
Company Registration No.: 198400182K
RELEASE OF FINANCIAL RESULTS FOR HALF-YEAR ENDED 31 DECEMBER 2010
The Board of Directors of Challenger Technologies Limited (the “Company”, and together with its
Subsidiaries, the “Group”) wishes to inform that the Company will be releasing the financial
results of the Company and of the Group for full-year ended 31 December 2010 on 21 February
2011, after trading hours.
By Order of the Board

Challenger already has a store at IMM, less than 5 minutes drive away from the upcoming Jcube. Wonder what's the point of saturating the area :S

(20-01-2011, 09:28 PM)yaosheng Wrote: Challenger already has a store at IMM, less than 5 minutes drive away from the upcoming Jcube. Wonder what's the point of saturating the area :S

2 stores at IMM actually. The new one is smaller in space i think just open in early Jan 2011.

Not cannibilizing even if in same store or nearby. I remembered years ago when I analysed, they have 3-5 stores (other than the main challenger store) at SSSq under different brandname. This is capturing the small fishes that swim away. Works in high catchment area. If it is a tactic that works for them in cut-throat SSSq, I dun think we can question Mr Loo that much if he is confident of repeating this feat elsewhere.

not vested

IMHO, CEO Mr Loo Leong Thye is the single most important and defining factor behind Challenger's steady growth and business success to-date.

The company has informed that it will release its FY10 (ended 31Dec10) full-year results on 21Feb11.....
http://info.sgx.com/webcoranncatth.nsf/V...E003113C4/$file/Fullyearresultended31December2010.pdf?openelement
So soon Challenger's shareholders will be able to know how well the business has done in H2-FY10 and for the whole of 2010, and how much will the FY10 Final dividend (FY09: $0.013/share) be?

Meanwhile, based on the 2 other announcements this week, we know that Challenger has just signed up 3 new shop leases - in AMK Hub, JCube (the new mall in Jurong East), and Mahkota Parade (in Malacca).....
http://info.sgx.com/webcoranncatth.nsf/V...E0036AB0F/$file/NewleasesAnnouncement20Jan2011.pdf?openelement [20Jan11 announcement]
http://info.sgx.com/webcoranncatth.nsf/V...F0005C3E2/$file/NewleasesAnnouncement21Jan2011.pdf?openelement [21Jan11 announcement]
I guess Challenger's shareholders can be assured that Mr Loo is still working very hard to expand the group's retail business and to realize his own goals/dream for the business that he has founded.

For those who have yet to find out the many growing businesses that now exist within the Challenger Group, you can simply visit the corporate website, and click on the boxes of the various businesses.....
http://www.challengerasia.com/

CHALLENGER TECHNOLOGIES LIMITED
(Incorporated in the Republic of Singapore)
Company Registration No.: 198400182K
NEW LEASE LOCATED IN MALACCA, MALAYSIA
The Board of Directors of Challenger Technologies Limited (“the Company”) wishes to announce that its wholly-owned subsidiary Challenger Technologies (M) Sdn Bhd has secured the following new lease:
Name of Shopping mall at which lease is located
Date of Commencement
Lease Area at Commencement
1.
Mahkota Parade in Malacca
Around May/June 2011
About 6900 sq ft